New Blog

A friend of mine, Chris Fox, and I are starting a blog "Good Morning, Economics" (hey it's better than this name). The focus is largely the same , but I'm going to be blogging with Chris, so I think I will probably be updating primarily if not exclusively that blog. Wordpress seems like it is a better service, and I suspect that it gets updated more frequently than Blogger.

Taxpayers Should Not Pay For Undersea Tunnels

Russia and former Alaskan governor Walter Hickel want to build a tunnel between Siberia and Alaska. The U.S. government does not appear to be very interested in paying for such a tunnel to be built, but the Russian government does and so do several Russian companies. A similar tunnel is proposed between Spain and Morocco, which would physically link Europe and Africa together. Spain and Morocco want the European Union to pay for building the tunnel.

Building such tunnels might be a good idea, or it might be a gigantic waste of money. The best way to tell if such tunnels are a good idea is to figure out if someone can make money from building a tunnel. Nothing would be gained by involving governments paying for tunnel building; there are no significant externalities, and there is no potential monopoly because private tunnels will compete with many other forms of transportation. Privately owned infrastructure is nothing new, some airports, including Auckland International Airport, are privately owned, and the English Channel tunnel (Chunnel) was the biggest infrastructure project ever to be wholly privately funded.

It is not clear that building large tunnels makes economic sense. Eurotunnel, who owns the Chunnel has not been able to make enough money to pay the interest on the 10 billion in loans it used to build the tunnel. It is encouraging that some private companies in Russia are interested in the Siberia-Alaska tunnel. I hope that governments leave tunnel building to private money, and leave taxpayers around the world out of it.

106 Years of Gold Prices

Supporters of the gold standard because of gold's stability should look at this plot of the real price of gold over the last hundred years. In the last hundred years, the price of gold has fluctuated a lot, sometimes very fast and unpredictably.

More about long term commodity prices here. Thanks to Institutional Economics.

The Constitution Game

A constitution does two things: it establishes the structure of a government, and it establishes some of the overarching principles the government is to operate by. Constitutionalism is important to principled government because it enforces governance by consistent principles over time.

Here's a game I play a lot:
If a new country were being founded and you had some say in shaping it's constitution, what features would it have?

The easiest way for me is to think of changes to the American constitution. I have a lot, but here are a few:

1) I would replace the single executive with a small executive council. I think an executive council would limit the policy setting influence the president currently has by limiting the charismatic influence the executive has.

2) I would make it easier to challenge the constitutionality of legislation and executive policy. Specifically, I like the mechanism where a small minority of legislators can send any bill, passed or unpassed, for constitutional review.

3) I would establish a rule against government keeping keeping secrets about policy. The recent scandal about extraordinary rendition was the event that led me to come up with this. Government should be allowed technical secrets, such as where exactly they rend prisoners to, when the situation demands it, but government should not be allowed policy secrets, like that the government rends prisoners to different countries in the first place.

What are yours?

Government and Smart Choices About Natural Disaster Risks

Libertarians like to argue that for most problems people make the best decisions for themselves because they have more knowledge about their own values, circumstances and options than anyone else and because they have productive incentives, so that forcing them to choose specific actions is bad. This is certainly true to an extent, but in some recurring cases, people have unproductive biases or have the poor information about their circumstances and options relative to others. For example, on the issue of natural disasters and insuring assets against damage, asset owners often have both limited knowledge and biases against buying appropriate insurance. To use the example of New Orleans, residents are unlikely to have good information about the risks they face from hurricanes, the costs and likelihood of a hurricane striking. In addition, people have a well known bias against events with small probabilities. When performing conscious or subconscious cost analysis, people tend to discount the importance of low probability events, which can be a serious problem if there are high cost but low probability events, so New Orleans residents will make less than good choices about insuring their homes and other assets against hurricanes.

What is the role of government in evaluating these risks and insuring against them? Producing information about certain common risks is surely a public good and one of the proper roles of government, but should government, as part its social contract, correct for well-known, widspread biases? On the issue of natural disasters this means forcing the purchase (through taxes) of insurance against low-probability, high-cost events.

Grays Harbor Logging Truckers Strike

It looks like margins on logging in Washington are getting small. A large fraction of logging truckers in Grays Harbor county have been striking for two weeks now because of low wages and hauling rates (more here, here and here). The truckers, who mainly truck for Weyerhaeuser, say that rates have not changed since 1984 (I assume they mean real wages, otherwise real wages have fallen by half). The truckers have started to lobby the state legislature for regulation and some sort of wage floor.

I suspect some of this is exaggeration, but I am still surprised that the long term labor supply market is so inelastic. This situation would make more sense if there had been a recent fall in wages or a spike in costs, because labor supply is usually much more inelastic in the short run than in the long run, but this does not seem to be the case. I am disappointed that the truckers are asking for minimum wage regulations. I hope the legislature does not give in to the pressure, especially because I don't think regulation will get the truckers what they want. First, Weyerhaeuser seems happy with not hiring them. Second, minimum wage regulations typically increase unemployment in the medium to long term instead of increasing worker welfare. This second point means some of this must be Weyerhaeuser's fault; instead of accepting higher wages and choosing to log only more profitable stands, the company has chosen to bear a strike and a lot of bad press. I am not completely sure what is going on in this situation, but I strongly suspect this problem has arisen because one or more parties are being more stubborn than is rational.

Marginal Costs of CO2

I've been investigating the marginal costs of CO2 emissions. This is the best paper I have found so far on the matter; it summarizes 88 different marginal cost estimates for CO2 emissions, and discusses the problems associated with the estimates. The aggregated estimates have very large uncertainties because the original estimates differ a lot and because most estimates had very large uncertainties themselves.

Atmospheric scientist Richard S. Lindzen has an article questioning how much we know about the net effects of global warming. The two most interesting quotes from his article:

There is no compelling evidence that the warming trend we've seen will amount to anything close to catastrophe.

and

the impact of carbon on temperature goes down—not up—the more carbon accumulates in the atmosphere

It is interesting that Lindzen claims we don't know enough about the net effects of global warming even as marginal costs are estimated. Both the summary paper and Lindzen note that climate change has both positive and negative effects, depending on location, which makes the net effects difficult to estimate and may explain the difference.

The second statement almost means that marginal costs are downward sloping. The marginal effects of increased temperature may still be increasing, but if this is true, then at some CO2 concentration we should not try to limit CO2 emissions any more.

From Environmental Economics I have found out about the Wall-Street Journal Energy Round-Up blog which seems to be very useful in finding out what's going on on energy related environmental matters. Some of the other blogs the WSJ hosts also look promising.

Legislator Pay

Tim over at the Adam Smith Institute blog suggests Brits overpay Parliament Members (MPs). Tim writes:

Demand in this case is fixed, there are 646 constituencies, so that is the number of MPs we require. There were some 3,500 people putting themselves forward for those more limited number of positions. Indeed, many of those paid £ 500 out of their own pocket in electoral deposits to have even the chance of applying for the job.

At first sight then we are paying too high a price for our MPs, as many more are willing to do the job than we have space for. However, shouldn't we be looking at the quality of such candidates? Making sure that we attract those fully qualified? Well, that's the nice thing about democracy. By definition, all and any of us is indeed qualified. So at second sight we are also over-paying our MPs.

Now, it might be true that MPs are overpaid, but as always, there is a trade off. Most constituents are qualified to apply for the job of legislator, but the qualification of applicants to actually be a legislator is determined by voters. The effect of reducing legislator wages, ignoring rent capturable as a legislator, is to limit the applicants to those who value their time less than the wages and fringe benefits offered. There is a trade off between taxes going to legislator pay and the overall quality of applicants. It is important to find an appropriate wage level.

There may be one novel benefit to reducing legislator pay. High pay may attract professional politicians who fake high qualification well, but will be poor agents for voters. Lower pay may limit applicants to those that get value from being good agents for voters.

Hayek on Liberty

I have been (slowly) reading The Constitution of Liberty by F.A. Hayek and I particularly like this quote explaining the value of freedom:

The value of freedom consists mainly in the opportunity it provides for the growth of the undesigned

Pigouvian CO2 Taxes or Cap-and-Trade?

Now that the supreme court has ruled that the EPA's mandate includes regulating CO2 emissions (link), I have been asking people what sort of regulation they expect; traditional regulations, CO2 taxes, cap-and-trade or something else? From the limited responses I have gotten people expect a cap-and-trade type of regulation to emerge.

Asking around has started me re-thinking about whether Pigouvian CO2 taxes or cap-and-trade regulation. I think the issue of estimating marginal costs for CO2 emissions is the most important factor for favoring one scheme or another. Pigouvian CO2 tax schemes require good estimates, while cap-and-trade schemes don't require estimates at all, but Pigouvian schemes provide flexibility and decentralized decision making in finding the optimal total CO2 emission level, while cap-and-trade schemes either don't allow changes or require centralized decision making for total CO2 emission levels. I initially favor Pigouvian taxes because they have more theoretical appeal and because of the flexibility they provide, and if good marginal cost estimates are possible then Pigouvian taxes will probably provide the most efficient outcome. If good marginal cost estimates for CO2 emissions can't be found, but, the science works out that there is an emissions limit below which emissions are relatively harmless and above which emissions are quite harmful then marginal costs spike around this limit and cap-and-trade solutions will be relatively efficient because we know enough about the marginal cost curve to set a cap level that will be quite close to the level where marginal costs are equal to marginal profits. If neither of these cases hold, then it is very difficult to say what is efficient, and the world is in quite a bind.

Does anyone know if there has been work done on creating marginal cost estimates for CO2 emissions? or if there is research that suggests an 'emissions limit'?

Semi-Informed Thoughts on U.S. Health Care

UPDATE:
I've been corrected on a few things.

This is my best analysis of the state of the US health care system based on what I heave read. I am not going to discuss the prescription drug aspect of health care problems because I think to a large degree this can be separated from other problems, and I think it's useful to do so. I should say, my best analysis is still not wonderful because I am not an expert on health care.
First of all, it is obvious that the US health care system pretty bad. There are two main problems. First, costs are very high; health care costs eat up a much larger chunk of the GDP in the US than in other countries (15% of GDP and rising in the US vs 10% in Canada). Second, a significant minority of people in the US don't have access to health care.

As I see it, a large chunk of the excess costs comes from the way we pay for health care. US health care insurance might be properly termed health care cost insulation (here Arnold Kling explains the difference better than I can). Americans tend to over-insure their health care. Americans insure essentially all of their health care consumption rather than insuring to reduce the risk of catastrophic costs. The effect of this is that neither consumers nor doctors directly bear the costs of most health care decisions, so of course health care will be over-consumed. It is possible that there are benefits to this arrangement, but I have not been able to identify any legitimate ones. One of the reasons for over-insurance is that the insurance that employers provide to employees is subsidized by the government, but I am not sure if this explains all the over-insurance.

I suspect part of the reason why many in the US lack health care is because of lack of quality flexibility in health care regulations. The way we licence doctors and other medical professionals in the US (I admit I am not very familiar with how we do this, but here are the requirements for Washington state) means that there is a relatively high minimum quality that medical professionals have to meet in order to sell their services. Licensing in Washington state requires graduation from medical school, two years of training and passing a test. This minimum adversely affects the poor because it imposes a quality/price floor on medical care which means rather than having lower quality medical care they have none. If this were not an issue, more lower quality but lower price medical care would likely be available. I have no doubt that licensing provides a valuable public good, information about medical care quality, but I think there is a need for more flexibility in the quality of medical care and more continuous information about that quality. The public good that licensing provides is not a minimum quality assurance, but information about the quality of medical care.

I would like to explain why I am very unconvinced by systems of socialized medicine as the remedy to our health care ills. I will note that I believe some sort of mandated or government provided minimum health care insurance would likely be preferable to the situation we have now, but not ideal. The overarching reason I do not think socialized medicine will improve anything is that there are enormous organizational costs associated with health care, coming from public good effects or other factors, so the government does not have any comparative advantage in providing medical care funding. Because pre-established institutional organization is the main advantage of government, and I do not see any place where this will be useful, I am skeptical of claims that government can make health care more efficient. One particular instance of this claim is that the government can reduce the costs oh health care by consolidation and the reduction of redundant information and administrative systems. This must be true to some extent, but if there were much cost saving associated with that then there would be a trend of health care insurance companies consolidating because they would be more profitable that way. Since this does not seem to be the trend, and because free market firms should be totally capable of minimizing these costs if they exist, this argument is not persuasive.

I have two questions: one, am I missing anything about the benefits of health care cost insulation? and two, am I missing anything about the organizational nature of health care that gives government an advantage?

Presidential Candidate Ron Paul Against the Iraq War

I don't know very much about politics, but I've heard some good things about Ron Paul (R-TX) from my libertarian friends, and Don over at The Freeman's Burden posted this video of a speech given by presidential candidate Ron Paul in congress against the war in Iraq. It is clear from the video that Ron Paul is a talented speaker, and it has been quite some time since I have had this much respect for any politician.

EPA Regulation of CO2 Emissions

On Monday, the Supreme Court ordered the EPA to revise its policy regarding CO2 emissions (NYT article). It sounds like this will lead toe the EPA regulating CO2 emissions. I can only hope that we get something similar to Pigouvian style emissions taxation as Greg Mankiw has been talking about for some time (two recent posts here and here), and that I will claim to have independently thought up. The important steps would be: 1) find some way to estimate marginal social (distributed) costs caused by CO2 emissions (yikes! that sounds hard) 2) establish some sort of method to estimate emissions by the different polluters (less hard) 3) tax those emissions based on the marginal social costs. This might take the form of taxing emissions directly, or, more likely, taxing fuel based on the CO2 emissions it will release when combusted. 4) enjoy an efficient (though local) level of CO2 emissions :)

Pigouvian taxes have many advantages over other government solutions to pollution like technology subsidies or alternative fuel subsidies. One, the government has to know many fewer technical details about the future of innovations in pollution reduction and fuel efficiency. Also, the system is much less prone to pork, corporate welfare and favoritism. The system also makes it much easier to tell exactly when the government has done enough to reduce emissions. There are many other reasons, but I won't go into them here.

I am rather cynical about the prospects Pigouvian taxes actually being implemented, but I would love to be proven wrong.

As a side note, the NYT website is ultra annoying because if you double click anywhere, it brings up a definition for the word you clicked on, and I have a habit of fidgeting with my mouse and double clicking everywhere.

UPDATE:
Bush has responded to the Supreme Court ruling (LA Times reports):

But solving the problem, he said, must not cut into economic growth.
"It's going to require new technologies, which tend to be expensive, and it's easier to afford expensive technologies if you're prosperous," he said.

That sounds like subsidies to me.

South Korean/US FTA

The Bush administration, under the "fast track" authority to negotiate free trade agreements, completed a free trade agreement with South Korea on April 1st (NYT reports here). I was worried that the deal would not be completed fast enough to give congress the 90 days it needs to review the agreements and then vote without amendments on them. I get the impression that the agreement was rushed, and that it is not a terrific deal. I am somewhat worried about the relaxation of taxes on engine size which S. Korea has had to make, which seem environmental. Barriers to American agricultural products are also to be removed, which, because of American agriculture subsidies, will end up being bad for American taxpayers. The NYT article claims that 90% of all tariffs will be removed so I think this will still be a huge boon to both countries, even if there are substantial growing pains and some negative effects, I am still hopeful that congress will pass the agreement.

The Economist gives a little bit of background on the politics of the fast track authority here. The Wikipedia entry is also interesting.

I am continually annoyed at the power special interest groups have to establish protectionist policies and subsidies and to otherwise extract rent, but it seems almost inevitable that such power and influence will exist. I don't see any institutional fixes. Any ideas?

Two Shot and Killed on Campus

The Houston Chronicle reports that two people were shot and killed about 9 a.m. in Gould hall (here). Weird, I rode by Gould hall on my way to class at 9:30, and I didn't see any commotion.

Google Launches Transit Planner

For a while I have been wondering why Google has not teamed up with city mass transit systems to provide trip planning and visualization. It seems like a very lucrative revenue stream for Google and easy outsourcing for the government. Well, it turns out that Google has been doing just that, and Seattle is on of 10 cities to be part of the system! Austin, TX is the latest city to join Google (Google blog announcement).

For now it seems that the service only suggests one bus route per trip, but I am sure with time, it will emulate the Seattle Metro Trip Planner functionality and suggest several possible routes.

CATO On Immigration

I've been reading some old CATO Unbound web issues, and I like the one on Mexican migration. Richard Rodriguez has a wonderful essay on the cultural aspects of Mexican migration (here), and Douglas Massey writes about what he has learned about mexican migration from leading the Mexican Migration Project (here).

Though I enjoyed reading Rodriguez' essay a lot, I found Massey's essay more informative. Massey suggests that increased border security has actually been counterproductive to nativist goals by encouraging migrants to stay in the US, whereas before they would come to work and then leave after some time. Massey writes, "Undocumented population growth in the United States stems not from rising in-migration, but from falling out-migration."

UPDATE:
Massey discusses the consequences of current and past US immigration policy and suggests more sensible future policy in a paper (here).

Farm Subsidies Breakdown

The Environmental Working Group publishes the Farm Subsidy Database which tracks a ton of information on farm subsidies, especially American ones. Here is an interesting break down of spending between 1995-2005 by subsidy program. Unsurprisingly, corn is the most subsidized crop in the US. The breakdown of corn subsidies by year (here) shows that corn subsidies are actually rather volatile, and they have recently increased significantly. In 2002 corn subsidies totaled almost 2 billion dollars, but by 2005 they totaled almost 10 billion. Large corn subsidies are one of the main reasons why ethanol is so popular in the US. I would be very interested in seeing the size of the subsidies by crop relative to the amount of crop grown, to get a sense of the relative subsidization.

Will Gonzales Resign?

The firing scandal appears to be getting worse for attorney general Gonzales; some republican law makers are now calling for his resignation (more here). Gonzales is scheduled to testify before congress in mid April. It will be very interesting to see the content of his testimony. I get the impression that if things continue as they are, Gonzales will resign.

As much as I hate Gonzales, I am not sure if I will be glad if he steps down, because I am afraid Bush will appoint someone even worse than Gonzales. When Ashcroft resigned I was happy because I didn't like him, but he was succeeded by Gonzales, who has been undeniably worse.

Trade Sanctions Against China

The federal government announced today that it will be imposing economic sanctions on Chinese paper imports to offset the subsidies that China gives to paper makers. China has been classified as a 'non-market' economy for 23 years and therefore not subject to sanctions, but this action reverses that policy (full story).
It is somewhat disheartening, but not surprising, to see the government give in to obvious special interests. If the Chinese government wants to subsidize part of our paper consumption, more power to them. It will be interesting to see how much trade protection against China the US puts up in the near future. I hope it is not much.

Efficient Spiritual Environmentalism

Some time ago, I asked my friend if the environment has inherent value (value independent from human good; this was a loaded question), and in response he said that he didn't think it had any inherent value, but that the environment is valuable because humans have an inherent spiritual attachment to the earth. I had not considered this before, but I have to admit it is possible that a lot of people feel this way. I doubt that spiritual attachment to the earth is inherent, but it is certainly possible that many people do have such an attachment. I have to hope that this is not the case because I can't imagine any sort of public good more difficult to measure and legislate for than a spiritual good. Coupled with the difficulties in measuring environmental effects and estimating their costs, the problem of achieving relatively efficient behavior becomes almost intractable. Think about the problems we have in measuring global warming and the costs of its effects and then imagine how impossible the problem would be if we also had to measure how much people valued the environment itself.

Again on the Legitimacy of Government

In response to an earlier post about the moral legitimacy of governments John the Other wrote:

I think a government gains legitimacy by the fact that people would prefer it to the feudalism and/or Iraq-situation that would result if it went away.

One thought that Hussein's government was terrible and illegitimate, but seeing what happened to Iraq since his departure, one is at least much less certain.

While I nominally agree with this, I would like to expand a little bit. First, I think it is important to stress that the preference for government over no government is individual not collective. For a government to be morally legitimate, it must respect the rights of everyone on an individual basis. Second, for a government to be morally legitimate, the people in it need to be able to choose between government and no government, not just prefer it. Taking these two points into account, it is clear the Hussein's government was not morally legitimate because the people he killed would no doubt prefer no government to being dead, but they had no choice to opt out. This is not to say I support the Iraq war; the war was obviously not well planned, it continues to be expensive, and it has probably caused net harm to the people in Iraq.

Libertarianism Makes You Stupid

I like Seth Finkelstein's essay "Libertarianism Makes You Stupid" about how ... well, how libertarianism makes you stupid. The essay is well written and pretty funny because it's peppered with silly quotes from net libertarians.

Obviously I disagree with his main thesis, but I certainly agree with many of Finkelstein's criticisms of libertarianism. For example, I'm not a big fan of the tax-is-theft crowd, and their refusal to recognize the existence of public goods or that government can be a voluntary institution. I think that a lot of libertarians engage in a rather shallow analysis of anything government related.

I also like this comparative essay I found some time ago comparing economics to religion because it's creative, self-righteous and totally wrong all at the same time.

School Vouchers in Sweden

I was very interested to learn that a school voucher system was been tried very successfully in Sweden (one article on it). The system was apparently very quickly accepted and has lead to marked improvements in education quality and both teacher and student satisfaction. I am trying to figure out why this idea isn't supported more in America.

Can Government Be Legitimate?

I ran across a great comment thread (here) on an old post at EconLog. The commenters got to discussing the ultimate legitimacy of government, and one post in particular by "James" got my attention. James beautifully captures the good arguments against the legitimacy of the state. He writes:

One reason to reject the concept of legitimate government is that there have been no good arguments to believe that one exists. Philosophers, in their attempts at justifying various states, have defined government in terms of what a government is entitled to do, or in terms of a set of positive attributes. To move from the first approach to claims of legitimacy is to presuppose one's intended conclusion. To move from the second approach to claims of legitimacy becomes an argument for any agency having that set of attributes to be entitled to engage in those behaviors reserved to governments, but the defenders of the state refuse to accept this conclusion.
Another is that even if there are legitimate governments, there is no way to verify that an agency claiming to be a legitimate government really is one. As an empirical issue, there is no way to determine if some group of merry tax collectors is a government because there is no such defining attribute as "government-ness." In practice, such decisions are made by assertion and backed up by force.
Another still is that whatever ethical theory underlies one's philosophy of law must be able to answer the question, "May a non-government entity become a government?" If not, then any government is illegitimate. If so, then this implies a universal right of secession rather than the universal duty of submission that every existing government claims.
Another is that the story of the social contract as told by the British empiricists cannot be distinguished emprically from the formation of a marauding gang with really great esprit de corps. Nor can one verify that the formation of a social contract ever took place. Even governments recognize this problem in their own courts, as I cannot expect to win if I sue you for a debt and simply assert the existence a social contract between you and me.
Yet another is the frequently held selective application of social contract theory regarding obligations to the state. As modern social contract theorists tell it, you enter a social contract by driving on government owned roads or partaking of other government services. Must an entity be a government prior to gaining the priviledge of forming social contracts the way that a government does? Is so, then governments could not have formed by social contract. If not, then even governments must submit to social contracts when, for example, an IRS agent drives on a privately paved road. But the statists who make the "when you drive on these roads..." arguments are never willing to accept this conclusion.

James makes numerous wonderful points, and his argument against the state as it exists now is ultimately solid. My criticism of his post is that he fails to think more deeply about the important questions that he brings up. He brings up both the failure of social contract to explain the modern state and the fact that any sort of government should be morally indistinguishable from any other sort of human institution, but he fails to take his reasoning further. He doesn't try to answer his own question, "May a non-government entity become a government?". The answer is in fact, 'yes'. If a body came together, and formed a literal contract that includes a provision for leaving the contract, a government, morally indistinguishable from a bowling league, could be formed. It is important to note that there aren't any legitimate governments today but, I tend to think that the moral harm done by modern states is relatively minor because their behaviour is in many important respects similar to what the behaviour of literal contract states would be, so I don't think this should be an important libertarian issue. I wish I could talk to James; I bet we would have some interesting discussions.

I'm writing an essay on this topic (I have been for a while), and I hope I can post a draft soon.

On Hoppe's Derivation of the Private Property Ethic

I've had some time to mull over Hoppe's derivation of the private property ethic (available here), and though I find it extremely interesting, I think I have found major, though perhaps not insurmountable a flaw.

Hoppe's argument proceeds essentially by excluding all other ethics besides the private property ethic. As I understand it, it is essentially this:

1) Any argument that is inconsistent with the ability to argue is self contradictory
2) To argue, one must be able to use one's body and to appropriate other property by the use of it
3) Combining 1 and 2, all ethics besides the private property ethic are invalidated, so the private property ethic must be true.

The problem I see lies in 3. I don't think all other ethics are eliminated. For example, what might be called the 'anything goes' ethic is still valid. The ethical principle that anyone is justified in doing what they can do by force or otherwise still satisfies this rule, so the private property ethic is not the only valid ethic.

I am still quite happy with this meta-ethical rule however, because it demonstrates two special and important ideas. First, as Hoppe explicitly shows in his paper, the argumentation-consistency rule bars any sort of collectivism. This is important because it bars the most popular ethical opponents to the private property ethic. Second, Hoppe's argument suggests that one can indeed derive ethical principles from objective truths, even if it doesn't quite do so itself. I am optimistic that such a derivation can and will be made.

UPDATE:
I think that what Hoppe has proven is that of all what might be called 'property ethics' the private property ethic is the only self-consistent one. Property ethics are those that claim that the rightness or wrongness of an action depend on whether the actor has ownership over the subject of the action, and that ownership is non-overlapping; that is, no two actors can claim the same ownership over some subject (though they could share ownership through some agreement).

Austrian Economics and Interval Value Scales

I've been reading about Austrian economics, and how it differs from mainstream neoclassical economics. My understanding is that the Austrian economist's main criticism of neoclassical economics is that neoclassical economists treat value as interval, while one could only objectively claim ordinal preferences; that is, Austrian economists claim individuals only have an ordinal list of preferences, not a continuous interval scale of value. And they're right, you can't objectively claim that value is interval, but if value is ordinal only, then it is very curious that neoclassical economics is useful at all.
If neoclassical economics were totally wrong, then it wouldn't make successful predictions. So the truth must be somewhere between Austrian and neoclassical economics. I would like to suggest that interval value scales may be a useful approximation of actual ordinal preferences. Approximations are widely used in the sciences. For example, in physics, Newton's laws of motion are used all the time to make very accurate predictions even though they are approximations that ignore relativistic effects. When physicists figured that Newton's laws of motion were not entirely correct, they did not throw them out; they simply noted that they are approximations and made sure to note when they are useful and when they are not. This same approach could be used in bridging the gap between Austrian and neoclassical economics. If it could be shown experimentally that for many goods, the value scales of individuals are near interval then much of neoclassical economics would be validated. I haven't been able to come up with an experiment that would resolve this question, but I don't see any reason why it should be impossible.
I find it curious that nowhere in my readings have I found anyone who discusses the possibility.

The Road to Voluntary Government

I'd like to talk a little bit about how I came to support voluntary government. This process started because I was thinking about intellectual property (IP). Like many libertarians I came to the conclusion that it is not an innate right to be able to own ideas. Even though the institution of intellectual property has gained huge acceptance in the real world, many people struggle to justify it ethically. Ideas are not scarce resources, you can distribute ideas without reducing your ability to consume them. It makes no moral sense to establish property rights over non-scarce resources and, it is immoral to prohibit someone from using their property in a way which does not violate your property. So I decided that I did not believe that ideas could be property, but IP still seemed vital to continuing prosperity, because ideas are public goods and if people did not reap the benefits from their investment into researching ideas, then they would have little incentive to do so. For example, the only reason software companies sink resources into writing code, is because they know they will have the exclusive right to sell the product of that code. So I was stumped for some time. It didn't seem right that something could be necessary and unethical at the same time.
Then I realized that people would be willing to come to a collective agreement to pay an inventor if they benefit from using their idea, because it is both ethical and beneficial to agree to pay for the use of public goods. From there I started thinking about other public goods like roads and defense, and how similar agreements can exist to fund those as well. My second realization was that these agreements are very much like government. It would be very possible to form government around a voluntary social contract.
Realizing that an agreement to form a government could exist made me realize something else, which should have bothered me before, but didn't. Strict classic libertarian government, who's only role is to protect private property rights, but which is not voluntary, must still collect taxes (can't fund police without taxes), and is still unethical because forced payment is no less ethical because it goes to the protection of property, the protection of property is a good like everything else.
This chain of reasoning is what set me along the road to realizing how fully ethical government could be established. This was particularly satisfying to me because traditionally as libertarians get more moderate (less anarchist), they become less rigorous about their reasoning, and it becomes easier for them to support non-libertarian ideas, but here I had become much more moderate and much more rigorous at the same time. I later told one of my friends that I was both moderate and rigorous about my libertarianism, and I got a very strange look from him; very satisfying.

Morons are Infuriating

I read this article titled "Why do the rich give away so little?" by Austan Goolsbee. Goolsbee bemoans the fact that most rich people don't give away lots and lots of their money.
Goolsbee writes:

The rational economic argument for accumulating wealth says that people want to use it for something: to spend, to give to their families to enhance their future standard of living or to do something philanthropic. When you look at the Slate 60 list, however, you see that philanthropy can’t be the main reason. For all of their amazing generosity, the super-rich typically do not give away their entire fortunes, or even a big share. That’s what makes Buffett so notable. For 2006, the Slate 60 not including Buffett pledged or gave a little over $7 billion to charity. Yet as of September 2006, the 60 richest Americans had an estimated $630 billion of wealth, up more than $62 billion (about 10 percent) from the year before. People are accumulating money much faster than they are giving it away. Carroll says the super-rich can’t be accumulating the money with the intention of spending it, either, because no one could spend that much.

I found it very irritating because the author is under the impression that wealthy people hoard money and just sit on it, like Scrooge McDuck. I can understand being angry about that, that would be monumentally stupid and hurt pretty much everyone, but rich people are anything but stupid with their money (duh, that's why they're rich). The money of rich people is almost always productive; they have investments. If Goolsbee had taken any time at all to think from the perspective of a rich person, he wouldn't have written this article. It's one thing to be angry at the rich, but this is just moronic.

UPDATE:
I have recently learned that Goolsbee is a professor of economics at the University of Chicago (link), which just further confuses me. Shouldn't Goolsbee know better? I spent some time re-thinking this article, but I still can't figure out where he's comming from.

Yum, more alcohol.

So, the Washington state senate is looking to double the number of liquor stores open on Sunday (read about it here). I should note that in Washington, all hard liquor sales must be done at state run liquor stores. Not exactly a victory for free markets, but anything that increases my access to alcohol is good by me.

What caught my eye was this little gem by the head of the budget panel, Margarita Prentice (D-Renton): the Seattle PI says, "She said she has carefully watched the pilot project and is convinced that further expansion would raise needed revenue without causing more alcohol problems." What a shock! You mean to say that more store hours increases profits? and that alcoholics aren't too stupid to buy a day in advance? The government is fabulous at controlling scarce goods. I suppose I should just count my blessings that that I can buy beer at Safeway.

The budget panel is supposed to pick the locations by September. Efficient.

No Time to Write

I would really like to write and post stuff to this blog more, but this last week of school and finals week next week will be taking up a lot of my time. I plan to write significantly more over spring break.

Wow: A Derivation of the Private Property Ethic

I have long assumed that an ethical system must be axiomatic. You can't derive a system of ethics from a priori knowledge. But I have been proved wrong; Hans Hoppe wrote a paper doing just that. In his paper, which you can read here, Hoppe derives the private property ethic and the homesteading principle.

Hoppe's argument is roughly this:

1) Any proposition which is inconsistent with the ability to make propositions is self contradictory.
2) For a human to make any proposition requires the presupposition of exclusive use over that human's body (private property).
3) Combining 1 and 2 means the only self consistent ethic is private property.

There are a lot of subtilities in his argument that I don't think I have grasped yet. I am not sure I am convinced by his proof of the homesteading right, and I am troubled by the fact that his proof does not seem to offer a justification for the meta-right, the right to enforce your rights by force.
Although I have some concerns about the argument, I am none the less very excited and happy to heave read this paper. I need time to mull this paper and Hoppe's arguments over.

A Step in the Right Direction for Washington State

On my way home from school I happened to glance at a Seattle Times newspaper stand as I walked by. I was very happy to read that the Washington State Senate has passed a bill creating 'domestic partnerships' which provide some of the same legal rights as marriage does. Governor Gregoire has said she supports the bill, so she is expected to sign it if it passes the house. Domestic parnerhips will provide hospital visitation, inheritance, funeral arrangement rights, as well as a few other rights. Hopefully this is just a stepping stone to establishing equal marriage rights for gay couples in the next few years.
The Seattle Times article has an interesting map showing the states that have same-sex partnership laws and the states that have legislation pending. Washington will be the seventh such state.

I have to applaud Sen. Dale Brandland from Bellingham who was the only republican to vote for the bill. Dale cited hearing Charlene Strong speak as the reason he voted for the bill. Charlene spoke in the senate earlier about being denied the right to visit her life partner, who later died, in the hospital after her partner was trapped in her basement studio by rising storm water. Way to go Dale; way to put principle over party.

I should note that in general I oppose conferring special economic rights on married couples, but because the current government sanctioning of marriage is not likely to change anytime soon, I support equal application to heterosexual couples and homosexual couples.

Academic Decisions

I've recently realized that I would seriously consider going back to school and getting a PhD in economics after working as an engineer for a few years after I graduate. This came as somewhat of a surprise to me because in the past, I have been pretty set against going to engineering or computer science grad school. I don't think I would enjoy going to grad school and doing research for either engineering or computer science, but I had not even considered economics. I think economics is attractive to me because I already spend a pretty significant amount of time thinking about economics and politics, and because (I'm going to be pretty arrogant and a bit naive here) I really think I might have something to contribute.

Federal Appeals Court Upholds Habeas Denial for Guantánamo Detainees

CS Monitor reports that the federal appeals court has upheld the constitutionality of the Military Commissions Act, which denies Guantánamo detainees the right to legally challenge their detention (Habeas Corpus). The majority decision talks about how striking down the MCA would be to "defy the will of congress," but that's not the issue here. No one claims that congress doesn't want to limit court access to detainees, the MCA makes that abundantly clear, but the constitution also makes it abundantly clear that congress can't suspend the right of Habeas Corpus except in times of rebellion or invasion. The constitution recognizes that the right of Habeas Corpus is fundamental to a fair and even justice system. Maintaining a fair and open system of justice is the primary function of government. There is no way that phrase can be interpreted as not limiting the power of congress to suspend Habeas Copus, but if it could, congress doing so is still a major disservice to the people congress represents because it sets a terrible precedence, ripe for abuse, and because it makes it orders of magnitude easier and more likely for the people to violate the rights of detainees through the government. Whether or not congress can constitutionally deny the right oh Habeas Corpus to detainees, doing so delivers a major blow to the justice system as a moral force and drives the government further away from serving the people into ruling the people.

What are your rights?

Most libertarians believe people have a certain set of 'natural rights.' Usually these are: life, liberty and property. This set of rights seems somewhat vague to me so, after quite a bit of thinking, I've come up with what I think is a more rigorous set of rights.

For the sake of completeness, I will include the corresponding duty associated with each right.

There are two natural rights and one meta-right:

Right #1: The right of property. Individuals have the right to 'use-and-exclude' their property. They have the right to use their property how they see fit, and they have the right to exclude others from using their property. The corresponding duty is to respect the use and exclusion from other individual's property.

Right #2: The right of contract. Individuals have the right to make mutually binding agreements with other individuals. The corresponding duty is to abide by the agreements you are part of.

Meta-Right: The meta-right is the right of individuals to enforce their other rights by force, and to extract compensation for violations of their rights.

I should expand a little bit on 'property.' First, you can only own well-defined, scarce resources. Second, there are a few 'natural ownerships'; resources that people naturally own. For example, people own their own body. Also, people corporately own fluid resources that they share direct access to. This gives people ownership over resources like the atmosphere they breathe.

I don't pretend that this set of rights are objective or anything; I just assume them. I would love to hear any criticisms of these rights or additions to them.

Freedom To Marry Week

February 12-17 is Freedom To Marry week, started by the organization Freedom To Marry, during which groups around the country have parties, host debates, write op-ed pieces and collect signatures on the Marriage Resolution which states:

Because marriage is a basic human right and an individual choice,
RESOLVED, the State should not interfere with same-gender couples who choose to marry and share fully and equally in the rights, responsibilities and commitment of civil marriage.

I went out with the Libertarian group at the UW and to collect signatures. We bought a ton of cheap after-Valentine's day candy and had a tabling event on the HUB lawn. Astrid and I even made a pretty banner with hearts that said "Freedom To Marry week; Liberty Requires Tolerance," but it was really windy so we couldn't put it up. We collected a TON of signed resolutions, and we had a good time. Two groups of Mormons were out, one tabling and one on mission. We talked to them and tried to get them to sign the resolution, and they seemed surprisingly amiable to it. The tabling group read the proposal, and talked a little bit about how the Prophets didn't really say anything about the issue but they didn't seem very interested in the issue and didn't sign the resolution. Later, we talked to the guys on mission, and they said they couldn't sign it while they were on mission, but gave us a thumbs up on the issue. There was also a Muslim guy who came to talk to us who said it would be lying if he signed it since it was against his religion, but I pointed out that the resolution wasn't about religious marriage, just civil marriage so he said he did support that, and ended up signing the resolution. Yay!
A bit on my position on marriage:
While I don't think that the government should sponsor the marriage relationship, I realize that it is not going to stop any time soon. If the government is going to sponsor marriage, then I think it has to do it evenly, and not discriminate. Hence my support for Freedom To Marry.

Letter to the Editor

The Daily is the local school newspaper at the University Of Washington, where I go to school.
About a week ago, I was upset at this really bad article on why sex should be within marriage only they published. It is notoriously difficult to get conservative writers to write for the paper, so I can understand that they have to go with what they get, but this was a particularly bad article. I wrote this letter to the editor in response:

Last week's article "Marriage is the right way for sex" by Brandon Dennis was so bad it was almost self parodying. There are good conservative writers with intelligent things to say and well thought out arguments, but Mr. Dennis is not one of them. I have to wonder whether Dennis has spent much time thinking about his positions or if he just writes about them.

Dennis makes the strange claim that people are "built with an innate desire for marriage." Without religious reasoning, this is a pretty weird notion. People have a genetic desire to participate in one particular social institution? Give me a break. He makes a half-hearted attempt to support his claim, but ends up just restating his
opinion.

At one particularly silly point in the article, Dennis cites the Declaration of Independence, and seems to suggest that perhaps people don't have the right to engage in casual sex because it is not the pursuit of happiness since it doesn't make people happy.

Even the strongest argument made in the article, which is that it is possible to get hurt by having sex outside of marriage, is pretty lame. It's possible to get hurt in any type of romantic relationship, including marriage; about one half of American marriages end in divorce. He seems to argue that if it's possible to get hurt by doing something then you shouldn't do it at all, which is ridiculous.

His article doesn't make any credible arguments against sex outside of marriage so I don't know why Dennis thinks it is bad idea, and I suspect he doesn't know either.

I am not a conservative by any measure, and I realize that it is difficult to find local credible conservative voices, but I think the Daily does a disservice to its readers when the only conservative viewpoint presented is so difficult to take seriously.

I would have liked to respond some more, but it's supposed to be under 250 words and it's already 300+

George Bush to propose a new tax plan for health insurance

In his State of the Union speech, the president is going to propose a new plan to change the way health insurance is taxed. Right now, health insurance acquired through employers is regarded as a fringe benefit and is not taxed. Individually purchased health insurance is taxed by taxing the income used to pay the insurance. Bush's plan would allow both types of individuals to take a $15,000 (for families, $7,500 for individuals) deduction and anything beyond that will be taxed. Bush claims that it is designed not to affect tax revenues in any way.

I support this because it will even the subsidy and make it available to everyone, not just people who can get insurance through their employer. I was very surprised to see Bush come out with a plan that, at least, seems economically sound.

People seem to be complaining that it will spell then end of employer provided health insurance, but I can't figure out why that system appeals to so many people.

http://www.gooznews.com/archives/000600.html
http://www.needlenose.com/node/view/3748

New respect for Al Gore

On Martin Luther King Jr. day, Al Gore gave a speech railing against the Bush Administration for the huge executive power expansions it has made. Text of the speech is available here. I saw a few highlights from the speech, and he seemed stiff as ever, but the actual speech is quite good. Finally a politician talks about something I care about. Because of this speech, and his semi free-market environmentalist views, I would actually seriously consider voting for him if he ran for the presidency (or anything really). I have not heard any other politicians really discuss this extremely important topic.